EXHIBIT 3
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
This Amendment No. 2 to Rights Agreement (the "Amendment No.2
Agreement") is entered into as of July 31, 1997 between PSINET INC., a New
York corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW
YORK, a New York corporation (the "Rights Agent").
PREAMBLE
The Company and the Rights Agent are parties to that certain
Rights Agreement dated as of May 8, 1996, as amended by Amendment No. 1
thereto dated July 21, 1997 (the "Rights Agreement"), pursuant to which the
Company authorized and declared a dividend of one preferred share purchase
right for each outstanding share of the Company's Common Stock entitling
the holders thereof to purchase from the Company one one-thousandth of a
share of Series A Junior Participating Preferred Stock of the Company in
connection with certain corporate transactions.
The Board of Directors of the Company has deemed it advisable to
further amend certain provisions of the Rights Agreement pursuant to
Section 27 of the Rights Agreement.
Capitalized terms used in this Amendment No. 2 Agreement but not
otherwise defined herein shall have the respective meanings ascribed to
them in the Rights Agreement.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties, intending to be legally bound,
hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended (i)
by deleting each reference contained therein to the term "20%" and
inserting in its place in each case the term "20.50%" and (ii) by inserting
at the end thereof the following:
Notwithstanding the foregoing, in no event shall (i) IXC or any
of its controlled Affiliates become an "Acquiring Person" solely
by reason of the acquisition by IXC or any such controlled
Affiliate of shares of Common Stock pursuant to Section 3.5 of
the IRU Agreement or (ii) Xxxxx X. Xxxxx become an "Acquiring
Person" solely by reason of the issuance or exercise of options,
if any, granted to Xxxxx X. Xxxxx in his capacity as a director
of the Company; PROVIDED, HOWEVER, that, in the case of either
clause (i) or (ii) of this sentence,
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any subsequent change in any
such Person's Beneficial Ownership of Common Stock may cause such
Person to become an "Acquiring Person."
2. Section 1(b) of the Rights Agreement is hereby amended by
inserting at the end thereof the following:
; PROVIDED, HOWEVER, that (A) no Person (other than IXC and its
controlled Affiliates) shall be deemed to be an Associate or
Affiliate of IXC or any of its controlled Affiliates unless such
Person is or shall be deemed to be a member of a "group," within
the meaning of Rule 13d-5 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this
Agreement, of which IXC or any of its controlled Affiliates is a
member for or in furtherance of the purpose of (x) acquiring,
holding, voting or disposing of securities of the Company,
(y) seeking to control the management, Board of Directors or
policies of the Company, or (z) effecting or seeking to effect
any action, transaction, change or matter referred to in any one
or more of clauses (a) through (j) of Item 4 of Securities and
Exchange Commission Schedule 13D as in effect on the date of this
Agreement, or otherwise is or shall be deemed to be acting in
concert with IXC or any of its controlled Affiliates for or in
furtherance of any such purpose and (B) neither IXC nor any of
its controlled Affiliates shall be deemed to be an Associate or
Affiliate of any Person (other than IXC or any of its controlled
Affiliates) unless such Person shall be deemed to be a member of
a "group," within the meaning of Rule 13d-5 of the General Rules
and Regulations under the Exchange Act as in effect on the date
of this Agreement, of which IXC or any of its controlled
Affiliates is a member for or in furtherance of the purpose of
(x) acquiring, holding, voting or disposing of securities of the
Company, (y) seeking to control the management, Board of
Directors or policies of the Company, or (z) effecting any
action, transaction, change or matter referred to in any one or
more of clauses (a) through (j) of Item 4 of Securities and
Exchange Commission Schedule 13D as in effect on the date of this
Agreement, or otherwise is or shall be deemed to be acting in
concert with IXC or any of its controlled Affiliates for or in
furtherance of any such purpose.
3. Section 1(n) of the Rights Agreement is hereby amended
(i) by deleting the reference contained therein to the term "20%" and
inserting in its place the term "20.50%" and (ii) by inserting at the end
thereof the following:
; PROVIDED, HOWEVER, that, (A) notwithstanding clause (v) of this
Section 1(n), neither IXC nor any of its Affiliates or Associates
shall be deemed to be an "Exempt Person" for purposes of this
Section 1(n) as a result of the acquisition by IXC or any of its
Associates or Affiliates of shares of Common Stock
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directly from
the Company pursuant to the IRU Agreement and (B) Xxxxx X. Xxxxx
shall not be deemed an Exempt Person by reason of the issuance or
exercise of options, if any, granted to him in his capacity as a
director of the Company.
4. Section 23(a)(ii) of the Rights Agreement is hereby amended
by deleting the reference contained therein to the term "20%" and inserting
in its place the term "20.50%."
5. Section 27 of the Rights Agreement is hereby amended by
inserting at the end of the first sentence thereof the following:
; PROVIDED, HOWEVER, that the Company may not, without the prior
written consent of IXC, effect any such supplement or amendment
that materially adversely affects the interests of IXC and/or any
of its controlled Affiliates, it being understood and agreed that
the foregoing shall not alter, diminish, modify or impair the
right of the Company to supplement or amend any provision of this
Agreement pursuant to this Section 27 insofar as it may relate to
the approval by the Board of Directors of any transaction with
and/or any matter involving a Person other than IXC and/or its
controlled Affiliates regardless of whether such transaction or
matter could result in a Transaction, Permitted Offer, change of
ownership or control of any of the Company's businesses or
operations or any of its controlled Affiliates, change in the
composition of the Board of Directors, change of relative
Beneficial Ownership of Common Stock of the Company then
outstanding, or other similar fundamental corporate change
involving the Company and/or any of its controlled Affiliates.
6. Except as herein specifically amended, the terms of the
Rights Agreement shall remain unmodified, and the Rights Agreement, as
amended by this Amendment No. 2 Agreement, shall remain in full force and
effect.
7. This Amendment No. 2 Agreement shall be deemed effective of
the date hereof; provided, however, that if the IRU Agreement (as defined
in Section 1 hereof) is terminated or abandoned, this Amendment No. 2
Agreement shall be of no further force or effect.
8. This Amendment No. 2 Agreement shall be deemed to be a
contract made under the laws of the State of New York and for all purposes
will be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State.
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9. This Amendment No. 2 Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 Agreement to be duly executed and attested, all as of the day and
year first above written.
PSINET INC.
By: /S/ XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President and
Chief Executive Officer
Attest:
By: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President,
Secretary and General
Counsel
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /S/ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title: Assistant Vice President
Attest:
By: /S/ XXXXXX XXXXXXXXX
Name: XXXXXX XXXXXXXXX
Title: VICE PRESIDENT
